Monopolistic Competition

Monopolistic
Competition
Prepared By:
Mayar El Mokadem
Mohamed Khamis
Hesham Ashraf
Mahmoud Fekry
Saif El Gamsy
Ahmed Ashour
Fakhreldien Mohamed
Content
01 Definition 02 Characteristics
Monopolistic
03 Competition 04 Examples
vs. Perfect
Competition
01
Definition
In monopolistic competition, there are still many
buyers as well as sellers. But they all do not sell
homogeneous products. The products are similar,
but all sellers sell slightly differentiated products.
Monopolistic competition exists when many

companies offer competing products or services
that are similar, but not perfect substitutes.
02
Characteristics
Low Barriers to Entry Demand Elasticity
one firm does not In monopolistic competition are
monopolize the market and very responsive to price changes.
multiple companies can Consumers will change from one
enter the market and all brand name to another for items
can compete for a market like laundry detergent based
share. solely on price increases.
Large Number of
Buyers and Sellers Product Differentiation
Competing companies
It is assumed that any
differentiate their similar
price-output policy of a
products with distinct marketing
firm will not get reaction
strategies, brand names, and
from other firms that
different quality levels.
means each firm follows
the independent price
policy.
Lack of
Maximize Non-price
Perfect
profits competition
Knowledge
The buyers and sellers In the short term, The market offers
do not have perfect companies may earn slightly different
knowledge of the extraordinary profits products, so businesses
market. There are within a monopolistic compete on
innumerable products competition market. product/service quality.
each being a close This is often due to the This can come through
substitute of the other. fact that consumers shorter wait times or
The buyers do not know want to try a new brand more attentive
about all these or want to experience employees.
products, their qualities new deals.
and prices.
03
Monopolistic
Competition vs.
Perfect
Competition
• In perfect competition, the product offered by competitors is
the same item. If one competitor increases its price, it will lose
all of its market share to the other companies based on market
supply and demand forces, where prices are not set by
companies and sellers accept the pricing determined by market
activity.
• In monopolistic competition, supply and demand forces do not

dictate pricing. Firms are selling similar, yet distinct products,
so firms determine the pricing. Product differentiation is the
key feature of monopolistic competition, where products are
marketed by quality or brand. Demand is highly elastic, and any
change in pricing can cause demand to shift from one
competitor to another.
04
Examples
Fast Food Company
The three companies mentioned above sell an almost similar type of

products but are not the substitute of each other. Now which product the
particular consumer likes the most and of which company totally
depends on him. Apart from the burger, other products are also sold by
these companies like French fries’, soft drinks, etc. All these products of
the mentioned companies are of similar nature but there is no
congruency between the products sold by the two as each one has a
slightly different shape and taste. This is the monopolistic structure.
Running Shoes
The market of the running shoes seems to be in full competition on the

one hand as there are many brands present competing as there are low
barriers to entry and exit. However, market of the running shoes seems to
be under the monopolistic structure on the other hand because the
uniqueness which each of the brands of shoe offers gives them the power
to charge the price which is different from the other competitors. The
companies can increase some of the features in their product and charge
the consumer accordingly for the new feature. If the consumer finds the
new feature worth for its price, then he would buy it otherwise not.
Patisserie
There are certainly a lot of bakeries in any town, and each one of them
sells a slightly differentiated product to the consumer in the market. But
if in a particular area of the town there exists only one bakery, then it can
demand a slightly higher amount of price for its products. The firms
under monopolistic competition with their ability can gain a greater
degree of market share due to which it can increase the prices of its
products.
The competition is a vital part of
Marketplace challenges. It helps the
industry to grow and be more efficient.
This competition also increases the
experience of a brand, and the industry
becomes glorious. Nowadays, changes are
in every corner, so the industry condition
should also be changed for betterment
Thanks!

Monopolistic Competition

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Monopolistic

Monopolistic competition exists when many

• In monopolistic competition, supply and demand forces do not

The three companies mentioned above sell an almost similar type of

The market of the running shoes seems to be in full competition on the

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